Many enterprises are responsible for establishing accurate forecasts for enterprise operations. Failing to meet established expectations can have significant negative impact on the enterprise in the areas of cash flow, stock price, liquidity, and investor faith, among other areas. Examples of enterprise planning activities for which accuracy is critical include revenue forecasting, expense planning, salary planning and the like. Enterprise business planning, however, is a difficult and expensive task that often produces inaccurate results.
Conventionally, enterprises have taken either a “top-down” or a “bottom-up” approach to enterprise planning. Bottom-up planning involves the aggregation of low-level forecasts from the lowest cost centers of an organization. For budget planning, for example, management personnel may be required to periodically forecast expenses, and allocate the expenses to a number of categories, such as advertisement, travel, and salaries. However, the bottom-up forecasts rarely, if ever, reconcile with top-down business targets.
In top-down planning, enterprises identify fundamental business targets, such as average product price, cost per employee, and the like, and push the targets down through the hierarchical structure of the enterprise. However, in performing top-down planning, large, diverse enterprises may develop planning models that do not fit the needs of all the business units or planning goals of the enterprise. In fact, diverse enterprises may develop multiple planning models, e.g., separate models for salary planning, revenue planning, expense planning and the like. The multiple planning models may be created by different individuals, sent out separately, and have separate reconciliation paths.